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Quantitative Methods : Linear Trends, Regression and Forecasting

1. The CEO of a small company is concerned about the continual growth in manufacturing costs over the past few years. The following is a time series of the cost per unit (in dollars) for the companys leading product over the past 8 years.

A. graphic this time series. Does a linear trend appear?
B. Develop the equation for the linear trend component for the time series. What is the average cost increase per year?
(see attached file label "costperunit.doc")

2. The ownership of a fast food chain wants to investigate the relationship between the daily sales volume in dollars of a company restaurant against the number of competitors within a 1 mile radius... (see attached file labeled "competitors.doc")

A. Develop a least squares estimated-regression-equation that relates dailysales volume to the number of competitor restaurants in the 1 mile radius.
B. Use the estimated regression equation developed in part A to forecast the daily sales volume for a particular company restaurant that has for competitors within a 1 mile radius.

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Linear Trends, Regression and Forecasting are investigated.

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